With international tourist arrivals reaching 1.4 billion in 2018—two years ahead of initial projections—the travel and tourism industry will continue to drive global connectivity. The World Economic Forum’s 2019 Travel and Tourism Competitiveness Report shows this growth is backed by improving global travel and tourism competitiveness, which stems, in part, from growing aviation capacity, increased international openness, and declining travel costs.

However, the report also shows the need for developing infrastructure, which may not be able to keep up with the additional 400 million arrivals forecasted by 2030. While infrastructure challenges differ for various regions and levels of economic development, failure to address these challenges may reduce competitiveness, hurting the travel and tourism industry.

Infrastructure—including air, ground, port, and tourism services like hotel rooms and car rental services—plays a vital role in travel and tourism competitiveness, serving as the arteries of the industry. And from a global perspective, infrastructure continues to improve.

Image: World Economic Forum

Since 2017, air transport infrastructure is one of the most improved components in the index, with strong growth in scores across most regions, subregions and economic development levels. However, much of this performance has come from growing route capacity and the number of carriers operating. Perceptions of the quality of air transport infrastructure, while better since 2017, have grown more slowly, while most recent airport density figures indicate slightly reduced airport access than before. These results potentially indicate that travel demand and airline growth may eventually outstrip hard-infrastructure capacity. By 2037, the International Air Transport Association projects the number of air passengers could double to 8.2 billion.

The report also shows that global perspectives on the quality and efficiency of ground transport infrastructure and services have remained, on average, near stagnant. Given the projected growth in travel as well as the need for infrastructure to accommodate more tourism-related needs, significant work will be required to bridge multi-trillion dollar investment deficits for airports, ports, rail and roads.

Assessing tourism infrastructure readiness

The results could be used to assess the infrastructure readiness of economies by looking at their scores for infrastructure and tourist arrival trends. The figure above compares country subregion and income-level groupings against their growth in international tourist arrivals from 2013 to 2017. It is clear tourism is growing in most subregions and among all income groups, with many above the global rate of growth.

Most of the regions on the right side of the figure above are relatively advanced countries with well-developed infrastructure. As a result, they may have more capacity to handle tourism growth. Moreover, it is also apparent that, despite market maturity, such countries are still welcoming more and more tourists each year. As the figure shows, high-income economies had the largest increase in arrivals, growing faster than the global rate. But while these economies have strong infrastructure, their share of arrivals and growth rates reveals the pressure on their infrastructure.

High-income economies analysed accounted for nearly 65% of arrivals in 2017 and 74.3% of growth in arrivals between 2013 and 2017. Subregions like Southern Europe and Eastern Asia-Pacific have seen rapid growth in arrivals, putting pressure on their more developed infrastructure. Arrivals in Western European countries, which on average, have the best infrastructure in the ranking, might seem to be below the global rate of growth but accounted for nearly one-fifth of global arrivals in 2017, and nearly 14% of the increase globally since 2013.

Northern Europe has experienced some of the fastest growth in arrivals in recent years and had the third-largest improvement in scores for air transport infrastructure since 2017. But its well-developed infrastructure may still come under strain, with this year’s report showing the region’s growth in ground, port and tourist infrastructure was below the global average.

South-East Asia has also experienced strong growth in tourism in recent years, but its near-average infrastructure scores indicate it might lack the capacity to continue accepting tourists. Countries like Vietnam, Indonesia and the Philippines have recently seen a surge in tourism, but, despite improvement in scores, all rank below average for infrastructure.

The regions on the left side of the figure mostly consist of lower-income countries. While these economies do not account for the same volume of arrivals as the more developed regions and countries, they still face capacity issues because their infrastructure is less developed. Nevertheless, due to higher price competitiveness, economic growth and declining travel barriers, many of these countries have also seen some of the biggest percentage increases in arrivals.

Countries in subregions on the upper left-hand quadrant may be at greatest risk of strain due to rapid visitor growth and underdeveloped infrastructure. In particular, this is an issue for South Asia, Western Africa, South America and the Balkans and Eastern Europe. On the other hand, nations on the bottom left-hand quadrant have less tourism growth, though this might be due to their limited infrastructure capacity, among other factors.

Competitiveness beyond infrastructure

How countries deal with their infrastructure will be a crucial factor in their long-term travel and tourism competitiveness. Even nations with developed airports and roads may face strain under growing utilization, which may lead to issues related to quality.

However, it is also important to note competitiveness relies on far more than just infrastructure. Emerging economies also have more work to do when it comes to improving business environments, addressing safety and security concerns and reducing travel barriers. Natural assets, which attract a significant number of visitors internationally, also need to be better protected. For example, South America and South-East Asia outscore the global average for natural resources by about 27% and 11%, respectively, but score below average for environmental sustainability. Consequently, many countries in these subregions may be at risk of damaging the very assets that make great travel destinations.

In some cases, improvements in one area of competitiveness without progress elsewhere can also lead to issues. For instance, Iceland’s improvement in air connectivity and surging visitor volumes was not matched by price competitiveness and overall tourism capacity, potentially explaining its recent slowdown.

Handling all these issues cannot be the purview of only travel and tourism stakeholders. Improving competitiveness, especially as it relates to travel and tourism, requires a holistic, multistakeholder approach.

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Written by

Maksim Soshkin, Research and Analysis Specialist for Aerospace, Aviation, Travel and Tourism, World Economic Forum

The views expressed in this article are those of the author alone and not the World Economic Forum.